B-174427, JUL 14, 1972

B-174427, JUL 14, 1972

BID PROTEST - WITHDRAWN - REVIEW OF GSA MANAGEMENT PROCUREMENT PRACTICES DECISION REGARDING THE PROTEST ON BEHALF OF THE KALVAR CORPORATION AND METRO/KALVAR, INC., AGAINST GENERAL SERVICES ADMINISTRATION PRACTICES IN CONNECTION WITH THE PROCUREMENT OF VESICULAR MICROFILM SUITABLE FOR REPRODUCTION OF ORIGINAL MICROFILM RECORDS UNDER FEDERAL SPECIFICATION L-F -320B. SINCE KALVAR HAS WITHDRAWN ITS PROTEST, AND GSA HAS INDICATED THAT A THOROUGH REVIEW OF THE L-F-320B SPECIFICATION IS BEING MADE, NO FURTHER ACTION IS REQUIRED BY GAO ON THE QUESTION OF THE REVISION OF THE SPECIFICATIONS. ALSO, AN EXAMINATION OF THE AVAILABLE RECORD INDICATES THAT NO LEGAL BASIS IS PRESENTED TO QUESTION GSA'S MANAGEMENT ACTIVITIES. HOWEVER, THE REQUEST FOR A REVIEW OF GSA MANAGEMENT PRACTICES IN THIS AREA IS BEING REFERRED TO THE PROCUREMENT AND SYSTEMS ACQUISITION DIVISION FOR CONSIDERATION.

TO MR. VALENTINE B. DEALE:

WE REFER TO YOUR LETTER OF JUNE 2, 1972, AND PRIOR CORRESPONDENCE, PROTESTING ON BEHALF OF THE KALVAR CORPORATION AND METRO/KALVAR, INC. (KALVAR'S SALES AGENT), AGAINST GENERAL SERVICES ADMINISTRATION (GSA) PRACTICES IN CONNECTION WITH THE PROCUREMENT OF VESICULAR MICROFILM SUITABLE FOR REPRODUCTION OF ORIGINAL MICROFILM RECORDS UNDER FEDERAL SPECIFICATION L-F-320B.

BY LETTER OF MAY 9, 1972, YOU WITHDREW KALVAR'S OBJECTIONS TO THE USE OF FEDERAL SPECIFICATION L-F-320B AS AMENDED BY GSA, IN CONNECTION WITH INVITATION FOR BIDS NO. FPNHP-D-28534-A-1-17-72 (COVERING GSA'S REQUIREMENT FOR VESICULAR MICROFILM FOR FISCAL YEAR 1973), IN ORDER TO PERMIT THE AWARD OF A CONTRACT TO KALVAR. AS POINTED OUT IN YOUR LETTER OF MAY 3, 1972, KALVAR QUESTIONED THE ADEQUACY OF FEDERAL SPECIFICATION L- F-320B AS THE TECHNICAL CRITERION FOR PURCHASING VESICULAR FILM ON A GOVERNMENT-WIDE BASIS FOR MULTIPLE USE. WE NOTE THAT THE RECENT AWARD TO KALVAR ELIMINATES YOUR FEARS (WHICH GSA DISCOUNTS) THAT A MANUFACTURER COULD DELIBERATELY PRODUCE FILM WHICH MET ALL OF THE REQUIREMENTS OF L-F- 320B AS AMENDED BY GSA, BUT WOULD NOT BE ADEQUATE FOR REPRODUCTION OF ORIGINAL MICROFILM RECORDS. MOREOVER, WITH RESPECT TO THE NECESSITY FOR SPECIFICATION REVISIONS, THE FOLLOWING ADVICE IN GSA'S COUNSEL'S REPORT OF APRIL 3, 1972, IS PERTINENT:

"INSOFAR AS PROSPECTIVE REVISIONS OF THE SPECIFICATION ARE CONCERNED, THE GOVERNMENT, AS WELL AS INDUSTRY, IS SEEKING TO DEVELOP AN IMPROVED VERSION OF FEDERAL SPECIFICATION L-F-320B. AN INDUSTRY GROUP, THE TECHNICAL PRACTICE AND STANDARDIZATION COMMITTEE (TP&S) OF THE ASSOCIATION OF REPRODUCTION MATERIALS MANUFACTURERS, INC. (ARMM), IS CURRENTLY AND ACTIVELY WORKING TO IMPROVE SPECIFICATION L-F-320B AND IS EXAMINING SOME RELATED INDUSTRY STANDARDS, WHICH ARE ALSO IN THE PROCESS OF DEVELOPMENT. COMMENTS RELATING TO THE IMPROVEMENT OF THE SPECIFICATION WILL BE FORWARDED DIRECTLY TO THE NAVAL AIR SYSTEMS COMMAND OR TO THIS AGENCY FOR TRANSMITTAL TO THE COMMAND.

"IT IS ANTICIPATED THAT IN THE NOT TOO DISTANT FUTURE THE ABOVE DESCRIBED INDUSTRY GROUP WILL PROPOSE A NEW VERSION OF THE SPECIFICATION."

IT IS OUR UNDERSTANDING THAT GSA ANTICIPATES THAT REVISED SPECIFICATIONS WILL BE AVAILABLE FOR THE FISCAL YEAR 1974 PROCUREMENT OF VESICULAR MICROFILM.

IN LIGHT OF THE ACTION BEING TAKEN, WE AGREE WITH THE OBSERVATION IN YOUR MAY 3, 1972, LETTER THAT "THE KALVAR PROTESTS HAVE ALREADY SERVED A USEFUL PURPOSE BY ADDING IMPETUS TO THE UNDERTAKING OF REVISING THE SPECIFICATION." SINCE DETERMINATIONS OF THE GOVERNMENT'S ACTUAL REQUIREMENTS IN GIVEN BUYING SITUATIONS ARE PRIMARILY WITHIN THE DISCRETION OF THE CONTRACTING AGENCIES, THE ISSUES SURFACED BY YOUR PROTEST ARE BEING PRESENTED TO THE MOST APPROPRIATE FORUM - NAMELY, THE GENERAL SERVICES ADMINISTRATION AND THE NAVAL AIR SYSTEMS COMMAND IN COOPERATION WITH ALL INTERESTED SEGMENTS OF THE INDUSTRY. THUS, IT IS OUR VIEW THAT NO FURTHER ACTION BY OUR OFFICE IS INDICATED INSOFAR AS QUESTIONS RELATING TO REVISIONS TO THE GOVERNING SPECIFICATION ARE INVOLVED. WE ARE, HOWEVER, REFERRING YOUR REQUEST FOR A REVIEW OF GSA'S MANAGEMENT PRACTICES IN CONNECTION WITH THE PROCUREMENT OF VESICULAR MICROFILM TO OUR PROCUREMENT AND SYSTEMS ACQUISITION DIVISION FOR ITS CONSIDERATION.

WHAT REMAINS FOR CONSIDERATION IS YOUR ALLEGATION THAT GSA HAS ACTED ARBITRARILY AND UNFAIRLY IN ITS ADMINISTRATION OF THE CONTRACT FOR THE 1972 FISCAL YEAR PROCUREMENT OF VESICULAR MICROFILM. FROM OUR REVIEW OF YOUR DETAILED SUBMISSIONS ON THIS ISSUE AND GSA'S REPLY, WE MUST CONCLUDE THAT NO LEGAL BASIS IS PRESENTED FOR QUESTIONING GSA'S ACTIONS.

THE XIDEX CORPORATION RECEIVED THE SINGLE AWARD SUPPLY SCHEDULE CONTRACT COVERING FISCAL YEAR 1972 REQUIREMENTS FOR THE SIZES OF VESICULAR DUPLICATING MICROFILM COVERED BY L-F-320B AFTER COMPETITION WITH STROMBERG DATAGRAPHIX, THE THEN EXCLUSIVE DISTRIBUTOR IN THE UNITED STATES OF VESICULAR DUPLICATING MICROFILM MANUFACTURED BY KALVAR. AS TO THE SIZES NOT COVERED BY THE SPECIFICATION, MULTIPLE AWARD, SCHEDULE-TYPE CONTRACTS WERE NEGOTIATED WITH SEVERAL COMPANIES, INCLUDING KALVAR AND METRO/KALVAR. THE CONTRACT AWARDED TO METRO/KALVAR COVERED MOTION PICTURE VESICULAR FILM FROM FEBRUARY 1, 1971, THROUGH JANUARY 31, 1972, WHILE THE KALVAR CONTRACT FOR FISCAL YEAR 1972, ALTHOUGH PRIMARILY FOR MICRO- PHOTOGRAPHIC EQUIPMENT, COVERED SOME VESICULAR FILM ITEMS.

WITH RESPECT TO THE RELATIONSHIP OF THE XIDEX CONTRACT TO THE KALVAR AND METRO/KALVAR CONTRACTS, THE GENERAL COUNSEL TAKES THE POSITION THAT:

"ALTHOUGH NUMEROUS REQUIREMENTS CONTRACTS WERE PLACED TO SATISFY THE NEEDS OF EXECUTIVE AGENCIES DURING FISCAL 1972 FOR THE ITEMS IN QUESTION, THE MAIN INTERESTS, INSOFAR AS THE PROTESTS ARE CONCERNED, ARE THE SINGLE- AWARD XIDEX CONTRACT FOR VESICULAR FILM IN SIZES COVERED BY THE SPECIFICATION AND THE MULTIPLE-AWARD CONTRACTS OF METRO/KALVAR AND KALVAR FOR VESICULAR FILM IN SIZES NOT COVERED BY THE SPECIFICATION. ACCORDANCE WITH BASIC CONCEPTS APPLICABLE TO GOVERNMENT PROCUREMENT, THE CONTRACTS IN QUESTION WERE MADE TO SATISFY THE GOVERNMENT'S MINIMUM NEEDS. THEREFORE, AS TO THE SIZES OF FILM WHICH WERE COVERED BY A SINGLE- AWARD CONTRACT PREDICATED UPON SPECIFICATION L-F-320B, ANY VESICULAR FILM FURNISHED IN COMPLIANCE WITH THAT SPECIFICATION WOULD MEET WHAT HAD BEEN DETERMINED TO BE THE MINIMUM TECHNICAL NEEDS OF THE GOVERNMENT. ALSO, UNDER ARTICLE 1, SCOPE OF CONTRACT (SPECIAL PROVISIONS), THE CONTRACT (EXCEPT FOR SMALL REQUIREMENTS AND EXCEPT FOR A MAXIMUM ORDER LIMITATION) WAS TO SATISFY THE SUPPLY NEEDS OF EXECUTIVE AGENCIES OF ITEMS COVERED BY THE SCHEDULE FOR THE TERM OF THE CONTRACT.

"WE RECOGNIZE, OF COURSE, THAT IN THE SIZES IN QUESTION, SOME SPECIAL BRANDS OF VESICULAR FILM, WHICH MAY BE BETTER IN QUALITY, I.E., WHICH MORE THAN MEET THE MINIMUM REQUIREMENTS OF THE SPECIFICATION, AND WHICH MAY HAVE SOME FEATURES IN ADDITION TO THOSE REQUIRED BY THE SPECIFICATION, MAY ALSO SATISFY THE END-USE OF THE ITEMS UNDER CONSIDERATION. HOWEVER, WHERE A KNOWN SPECIAL REQUIREMENT OF AN EXECUTIVE AGENCY CANNOT BE SATISFIED BY THE SPECIFIC ITEMS COVERED BY A SCHEDULE CONTRACT, A WAIVER FROM THE MANDATORY USE OF THE SCHEDULE CONTRACT MAY BE OBTAINED BY THE AGENCY FROM GSA. WHEN THIS SITUATION EXISTS, AN ITEM IS SEPARATELY PROCURED OR IS ADDED TO ANOTHER CONTRACT FOR THE PURPOSE OF SATISFYING THE SPECIAL REQUIREMENT."

ON JULY 24, 1971, KALVAR APPLIED TO GSA TO LIST TWO NEW TYPES OF VESICULAR DUPLICATING MICROFILM IDENTIFIED AS KALVAR TYPE 14 AND KALVAR TYPE 16, IN THE STANDARD 16 MM., 35MM., AND 105 MM. SIZES. BY LETTER OF AUGUST 20, 1971, GSA REJECTED KALVAR'S APPLICATION ON THE GROUND THAT THE GOVERNMENT'S MINIMUM REQUIREMENTS WERE COVERED BY FEDERAL SPECIFICATION L- F-320B, WHICH WAS THE BASIS OF THE AWARD TO XIDEX. IN THIS CONNECTION, THE LETTER STATED THAT "THE FACT THAT THE QUALITY OF YOUR FILM EXCEEDS THE REQUIREMENT OF THE SPECIFICATION IS NOT JUSTIFICATION FOR PUTTING IT ON A MULTIPLE AWARD SCHEDULE."

SUBSEQUENTLY, BY LETTER OF AUGUST 16, 1971, METRO/KALVAR OFFERED AN AMENDMENT TO ITS CONTRACT WHICH, AMONG OTHER THINGS, PROPOSED TO ADD "16MM TYPE 163 UNPERFORATED AND 16MM TYPE 164 UNPERFORATED" FILM TO ITS MOTION PICTURE CONTRACT. THE ITEMS WERE ADDED BY AN AMENDMENT EFFECTIVE SEPTEMBER 14, 1971. LATER IT WAS DETERMINED THAT THE TWO ITEMS ADDED WERE ACTUALLY KALVAR TYPE 16 VESICULAR FILM OF THE SIZES COVERED BY FEDERAL SPECIFICATION L-F-320B. SINCE VESICULAR FILM IN THE SIZES IN QUESTION WERE COVERED BY XIDEX'S SINGLE-AWARD SCHEDULE CONTRACT, THE ITEMS WERE CANCELED FROM METRO/KALVAR SCHEDULE CONTRACT. IN THIS CONNECTION, WE DO NOT QUESTION YOUR POSITION THAT THE FILM HAS MOTION PICTURE APPLICATIONS; HOWEVER, IT WAS ORDERED AND USED FOR MICROFILM REPRODUCTION.

YOU HAVE URGED THAT GSA'S ACTION WAS, IN BOTH INSTANCES, ARBITRARY AND UNFAIR. SPECIFICALLY, YOU MAINTAIN THAT BOTH TYPE 14 AND TYPE 16 ARE NOT COVERED BY FEDERAL SPECIFICATION L-F-320B BECAUSE THEY EVIDENCE CHARACTERISTICS SUBSTANTIALLY DIFFERENT FROM THOSE REQUIRED BY THE SPECIFICATION. SIMPLY STATED, THE "SUBSTANTIALLY DIFFERENT" CHARACTERISTICS, WHICH THE TYPE 14 AND TYPE 16 FILM ARE ASSERTED TO EXCEED, ARE, IN EFFECT, QUALITY LIMITATIONS IMPOSED BY THE SPECIFICATION'S EXPRESSION OF CERTAIN "SENSITOMETRIC" CHARACTERISTICS IN MINIMUM AND MAXIMUM TERMS. IN THIS CONTEXT, THE TYPE 14 AND TYPE 16 FILM ARE ALLEGED TO BE NONSPECIFICATION FILM, AND YOU, THEREFORE, QUESTION GSA'S REFUSAL TO PERMIT KALVAR AND METRO/KALVAR TO SELL THIS FILM IN COMPETITION WITH XIDEX. YOU MAINTAIN THAT THE UNFAIRNESS OF GSA'S ACTION IS FURTHER HEIGHTENED BY VIRTUE OF THE FACT THAT XIDEX ACQUIRED A QUANTITY OF KALVAR FILM, INCLUDING TYPES 10, 14, AND 16, FROM STROMBERG DATAGRAPHIX AND HAS BEEN PERMITTED TO FURNISH KALVAR'S FILM IN SATISFYING REQUESTS UNDER ITS CONTRACT.

INSOFAR AS THE TYPE 10 IS CONCERNED, IT IS CONCEDED THAT IT FULLY COMPLIES WITH FEDERAL SPECIFICATION L-F-320B AND, CONSEQUENTLY, ITS USE IS NOT IN ISSUE. WITH RESPECT TO THE TYPE 14, GSA ACKNOWLEDGES THAT IT DOES NOT CONFORM TO THE SPECIFICATION. HOWEVER, THERE IS NO EVIDENCE IN THE RECORD BEFORE US THAT XIDEX HAS BEEN SUPPLYING TYPE 14 FILM.

HOWEVER, THE QUESTION REMAINS WHETHER THE TYPE 16, WHICH XIDEX HAS SUPPLIED, CONFORMS TO L-F-320B. A MEMORANDUM OF MAY 20, 1971, FROM THE ASSISTANT CHIEF OF THE ELECTRICAL AND ELECTRONICS BRANCH OF GSA'S STANDARDIZATION DIVISION STATES, IN PART, THAT:

"THE TECHNICAL DATA IN THE KALVAR BROCHURES WAS COMPARED WITH THE CORRESPONDING CHARACTERISTIC REQUIREMENTS IN THE FEDERAL SPECIFICATION. THE FINDINGS ARE AS FOLLOWS:

"KALVAR FILM TYPE 14: THIS FILM CAN BE CLASSIFIED AS TYPE I, DUPLICATING FILM, SUBTYPE A, NONREVERSIBLE *** CLASS 2, MEDIUM GAMMA. THEREFORE, TYPE 14 AS DESCRIBED IN THE BROCHURE IS NOT COVERED IN L-F-320B.

"FEDERAL SPECIFICATION L-F-320B ESTABLISHES THE 'MINIMM' ACCEPTABLE, CONCOMITANTLY PROVIDING 'RANGES.' *** KALVAR *** TYPE 16 FALLS) WITHIN THE RANGES INDICATED IN THE SPECIFICATION."

FURTHER, A MEMORANDUM OF JANUARY 19, 1972, FROM THE ACTING ASSISTANT COMMISSIONER, STANDARDS, INDICATES THAT INFORMAL CONTACTS WITH THE NAVAL AIR SYSTEMS COMMAND, THE ORGANIZATION PRIMARILY RESPONSIBLE FOR THE SPECIFICATIONS, YIELDED ESSENTIALLY THE SAME REPLY, I.E., "IT IS ADEQUATE, AND SHOULD ANY POTENTIAL SUPPLIER'S PRODUCT EXCEED THE REQUIREMENTS, NOTHING STOPS HIM FROM OFFERING SAME."

IN REPLY, YOU STATE IN YOUR LETTER OF APRIL 20, 1972, THAT:

"IN SUPPORT OF ITS CONCLUSION THAT KALVAR TYPE 16 FILM MEETS THE SENSITOMETRIC REQUIREMENTS OF SPECIFICATION L-F-320B, GSA CLAIMS TO HAVE RELIED UPON KALVAR'S OWN LITERATURE DESCRIPTIVE OF ITS TYPE 16 FILM. KALVAR KNOWS OF NO DESCRIPTIVE LITERATURE OF ITS OWN WHICH WOULD WARRANT THE CONCLUSION THAT ITS TYPE 16 FILM AFTER BEING TESTED IN ACCORDANCE WITH THE TEST PROGRAM SET OUT IN SPECIFICATION L-F-320B WAS FOUND TO BE WITHIN THE RANGES OF ALL OF THE SENSITOMETRIC REQUIREMENTS OF TABLE V OF THE SPECIFICATION. FURTHER, KALVAR'S GENERAL DESCRIPTIVE LITERATURE OF ITS PRODUCTS IS PREPARED FOR ITS COMMERCIAL CUSTOMERS AND IS NOT NECESSARILY BASED ON TESTS IN COMPLIANCE WITH ANY FEDERAL SPECIFICATION."

YOU HAVE ALSO SUBMITTED DATA WHICH, WHEN COMPARED WITH THE APPLICABLE PORTION OF THE SPECIFICATION, INDICATES THAT TYPE 16 FILM IS NOT WITHIN ALL OF THE RANGES SPECIFIED. HOWEVER, GSA HAS, AS YOU NOTE, TREATED L F- 320B AS THE "EXCLUSIVE TECHNICAL CRITERION" FOR VESICULAR MICROFILM AND XIDEX, BY VIRTUE OF ITS SUCCESS IN THE COMPETITION FOR THE GOVERNMENT'S FISCAL YEAR 1972 REQUIREMENTS, AS ITS CONTRACTOR FOR VESICULAR REPRODUCTION MICROFILM. WE BELIEVE GSA'S TREATMENT OF THE SPECIFICATION AND THE STATUS OF XIDEX IS ENTIRELY CORRECT AND ANY FAILURE TO ORDER ITS NEEDS UNDER THE XIDEX CONTRACT COULD WELL HAVE SUBJECTED THE GOVERNMENT TO A BREACH OF CONTRACT CLAIM BY XIDEX. MORE IMPORTANTLY, APART FROM ANY QUESTION OF TECHNICAL COMPLIANCE WITH THE SENSITOMETRIC CHARACTERISTICS OF L-F-320B, TYPE 16 FILM IS CONCEDED TO BE A PRODUCT OF HIGHER QUALITY INSOFAR AS CONCERNS THE DUPLICATION OF ORIGINAL MICROFILM. AND, WE MUST AGREE WITH GSA'S POSITION THAT THERE IS NO PROHIBITION AGAINST XIDEX FURNISHING A PRODUCT WHICH EXCEEDS THE GOVERNMENT'S MINIMUM REQUIREMENTS. SEE 48 COMP. GEN. 685 (1969); 38 ID. 830 (1959); B-167405, OCTOBER 3, 1969; B-155733, JANUARY 4, 1965. WE NOTE IN THIS REGARD THAT YOU DO NOT SUGGEST THAT GSA WAS UNDER ANY OBLIGATION TO INQUIRE INTO THE CIRCUMSTANCES SURROUNDING XIDEX'S ACQUISITION OF KALVAR FILM. IN ANY EVENT, IT IS OUR VIEW THAT GSA WAS ENTITLED TO CONSIDER THE FACT OF XIDEX'S POSSESSION OF KALVAR FILM IN MAKING THE JUDGMENTS THAT IT DID.

YOU HAVE ALSO QUESTIONED THE FAIRNESS OF PERMITTING XIDEX TO FURNISH FILM OF ITS MANUFACTURE WHICH, ON THE BASIS OF TESTS CONDUCTED BY KALVAR, YOU ALLEGE IS NOT IN CONFORMANCE WITH L-F-320B. WITH RESPECT TO FILM MANUFACTURED IN ITS OWN PLANT, GSA TAKES THE POSITION THAT THE PREAWARD SURVEY OF XIDEX DEMONSTRATED THAT THE FIRM HAD THE CAPABILITY TO SUPPLY VESICULAR MICROFILM IN AN ACCEPTABLE MANNER. MOREOVER, IT DISCLAIMS KNOWLEDGE OF ANY INSPECTION REPORTS OR COMPLAINTS OF USING AGENCIES INDICATING ANY FAILURES ON THE PART OF XIDEX TO SUPPLY ACCEPTABLE MATERIALS. SECTION 4 OF L-F-320B PLACES RESPONSIBILITY ON THE CONTRACTOR FOR INSURING THAT MANUFACTURE, TESTING AND INSPECTION ARE IN ACCORDANCE WITH THE SPECIFICATIONS, SUBJECT TO THE GOVERNMENT'S RIGHT TO CONDUCT SUCH INSPECTIONS AS ARE "DEEMED NECESSARY" TO INSURE THAT THE SUPPLIES AND SERVICES CONFORM TO THE REQUIREMENTS. RECOGNIZING THAT THIS IS A MATTER OF CONTRACT ADMINISTRATION, GSA'S FAILURE TO PURSUE THE MATTER IN THE ABSENCE OF COMPLAINTS OF USING AGENCIES IS NOT SUBJECT TO QUESTION BY OUR OFFICE AS AN ABUSE OF DISCRETION. AND, WE ARE NOT PREPARED TO SAY THAT XIDEX'S DECISION NOT TO COMMENT ON THE ADMINISTRATIVE REPORT SUPPORTS A SUGGESTION THAT IT IS NOT CONFORMING TO THE REQUIREMENTS OF L-F-320B IN ITS MANUFACTURE OF FILM. WE BELIEVE, HOWEVER, THERE IS SOME MERIT IN YOUR VIEW THAT THE TESTING REQUIREMENTS OF THE SPECIFICATION ARE IN NEED OF REVISION, PARTICULARLY IN LIGHT OF THE RECENT INCREASE IN THE COMPETITION FOR GSA'S VESICULAR MICROFILM REQUIREMENTS. IN THIS RESPECT, WE ARE ADVISED THAT THE ADEQUACY OF THE TESTING METHODS IS ONE OF THE AREAS UNDER CONSIDERATION IN CONNECTION WITH THE PLANNED REVISIONS TO L-F 320B.